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Managerial Accounting: Tools for Business Decision-Making, Second Canadian Edition

by Weygandt, Jerry J., University of Wisconsin, Madison; Kieso, Donald E., Northern Illinois University; Kimmel, Paul D., University of Wisconsin - Milwaukee; Aly, Ibrahim M., Concordia University

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Copyright, vi
About the Authors, vii
Preface, viii
Chapter 1. Managerial Accounting, 2
Accounting Professionals, 2
Managerial Accounting Basics, 4
Comparing Managerial and Financial Accounting, 5
Management Functions, 6
Organizational Structure, 7
Business Ethics, 8
Accounting Organizations and Professional Accounting Careers in Canada, 10
Managerial Accounting Today, 11
Service Industry Trends, 11
Managerial Accounting Practices, 12
Chapter 2. Managerial Cost Concepts and Cost Behaviour Analysis, 22
Costs Are Critical, 22
Managerial Cost Concepts, 24
Manufacturing Costs, 24
Product versus Period Costs, 26
Prime Cost and Conversion Costs, 26
Cost Behaviour Analysis, 27
Variable Costs, 27
Fixed Costs, 28
Relevant Range, 29
Mixed Costs, 30
Importance of Identifying Variable and Fixed Costs, 32
Manufacturing Costs in Financial Statements, 33
Income Statement, 33
Balance Sheet, 35
Cost Concepts—A Review, 36
Chapter 3. Job-Order Cost Accounting, 64
Print on Demand, 64
Cost Accounting Systems, 66
Job-Order Cost System, 66
Process Cost System, 67
Job-Order Cost Flow, 68
Accumulating Manufacturing Costs, 69
Assigning Manufacturing Costs to Work in Process, 70
Assigning Costs to Finished Goods, 77
Assigning Costs to Cost of Goods Sold, 78
Summary of Job-Order Cost Flows, 79
Reporting Job Cost Data, 80
Underapplied or Overapplied Manufacturing Overhead, 81
Cost of Goods Sold Method, 81
Proration Method, 82
Chapter 4. Process Cost Accounting, 110
Sweets Worth Waiting For, 110
The Nature of Process Cost Systems, 112
Uses of Process Cost Systems, 112
Similarities and Differences between Job-Order Cost and Process Cost Systems, 113
Process Cost Flow, 114
Assignment of Manufacturing Costs—Journal Entries, 115
Equivalent Units, 118
Weighted-Average Method, 118
Refinements on the Weighted-Average Method, 118
Production Cost Report, 119
Comprehensive Example of Process Costing Using the Weighted-Average Method, 120
Calculate the Physical Unit Flow (Step 1), 121
Calculate Equivalent Units of Production (Step 2), 121
Calculate Unit Production Costs (Step 3), 121
Prepare a Cost Reconciliation Schedule (Step 4), 122
Preparing the Production Cost Report, 123
Calculate Equivalent Units for a Sequential Process Setting, 124
Costing Systems—Final Comments, 127
Appendix 4A—FIFO Method, 129
Chapter 5. Activity-Based Costing, 166
Storage Solutions, 166
Traditional Costing and Activity-Based Costing, 168
Traditional Costing Systems, 168
The Need for a New Approach, 169
Activity-Based Costing, 169
Illustration of Traditional Costing versus ABC, 171
Unit Costs under Traditional Costing, 171
Unit Costs under ABC, 171
Comparing Unit Costs, 174
Activity-Based Costing: A Closer Look, 176
Benefits of ABC, 176
Limitations of ABC, 177
When to Use ABC, 177
Value-Added versus Non-Value-Added Activities, 178
Classification of Activity Levels, 180
Activity-Based Costing in Service Industries, 181
Traditional Costing Example, 182
Activity-Based Costing Example, 182
Chapter 6. Decision-Making: Cost-Volume-Profit, 218
Balancing Fixed and Variable Costs, 218
Cost-Volume-Profit Analysis, 220
Basic Components, 220
CVP Income Statement, 221
Break-Even Analysis, 223
Target Net Income, 227
Target Net Income after Tax, 228
Margin of Safety, 230
CVP and Changes in the Business Environment, 232
Sales Mix, 234
Break-Even Sales in Units, 234
Break-Even Sales in Dollars, 236
Appendix 6A—Cost Structure and Operating Leverage, 239
Chapter 7. Incremental Analysis, 270
Leaving it to the Experts, 270
Management’s Decision-Making Process, 272
Incremental Analysis Approach, 273
How Incremental Analysis Works, 273
Types of Incremental Analysis, 274
Accept an Order at a Special Price, 274
Make or Buy, 275
Sell or Process Further, 276
Keep or Replace Equipment, 279
Eliminate an Unprofitable Segment, 279
Other Considerations in Decision-Making, 283
Qualitative Factors, 283
Relationship of Incremental Analysis and Activity-Based Costing, 285
Chapter 8. Alternative Inventory Costing Methods: A Decision-Making Perspective, 314
No Fishy Business in Tracking Costs, 314
Inventory Costing Methods, 316
Illustration Comparing Absorption Costing and Variable Costing, 316
An Extended Example, 319
Decision-Making Concerns, 323
Performance Evaluation, 323
Potential Advantages of Variable Costing, 325
Appendix 8A—Other Inventory Costing Methods, 327
Chapter 9. Pricing, 358
Price and Quality Are Critical, 358
External Sales, 360
Target Costing, 361
Cost-Plus Pricing, 362
Variable-Cost Pricing, 364
Time and Material Pricing, 366
Internal Sales, 369
Negotiated Transfer Prices, 371
Cost-Based Transfer Prices, 374
Market-Based Transfer Prices, 375
Effect of Outsourcing on Transfer Pricing, 375
Transfers between Divisions in Different Countries, 376
Appendix 9A—Other Cost Approaches to Pricing, 378
Chapter 10. Budgetary Planning, 412
Turning Trash into Treasure, 412
Budgeting Basics, 414
Budgets and Accounting, 414
The Benefits of Budgeting, 415
Essentials of Effective Budgeting, 415
Length of the Budget Period, 415
The Budgeting Process, 415
Budgeting and Human Behaviour, 416
Budgeting and Long-Range Planning, 417
The Master Budget, 417
Preparing the Operating Budgets, 418
Sales Budget, 419
Production Budget, 419
Direct Materials Budget, 420
Direct Labour Budget, 421
Manufacturing Overhead Budget, 423
Selling and Administrative Expenses Budget, 423
Budgeted Income Statement, 424
Preparing the Financial Budgets, 425
Cash Budget, 425
Budgeted Balance Sheet, 428
Budgeting in Non-manufacturing Companies, 430
Merchandisers, 430
Service Enterprises, 431
Not-for-Profit Organizations, 433
Chapter 11. Budgetary Control and Responsibility Accounting, 460
Volatility Is a Way of Life, 460
The Concept of Budgetary Control, 462
Static Budget Reports, 463
Examples, 463
Uses and Limitations, 464
Flexible Budgets, 465
Why Flexible Budgets, 465
Developing the Flexible Budget, 467
Flexible Budget—A Case Study, 468
Flexible Budget Reports, 470
Management by Exception, 470
The Concept of Responsibility Accounting, 471
Controllable versus Non-controllable Revenues and Costs, 473
Responsibility Reporting System, 473
Types of Responsibility Centres, 474
Responsibility Accounting for Cost Centres, 476
Responsibility Accounting for Profit Centres, 476
Responsibility Accounting for Investment Centres, 479
Principles of Performance Evaluation, 481
Appendix 11A—Residual Income—Another Performance Measurement, 483
Chapter 12. Standard Costs and Balanced Scorecard, 518
High Performance Is Child’s Play, 518
The Need for Standards, 520
Distinguishing between Standards and Budgets, 520
Why Standard Costs?, 521
Setting Standard Costs—A Difficult Task, 521
Ideal versus Normal Standards, 521
A Case Study, 522
Analyzing and Reporting Variances from Standards, 525
Direct Materials Variances, 526
Direct Labour Variances, 528
Manufacturing Overhead Variances, 531
Reporting Variances, 536
Statement Presentation of Variances, 537
Balanced Scorecard, 537
Appendix 12A—Standard Cost Accounting System, 541
Chapter 13. Planning for Capital Investments, 572
Not an Easy Path to Follow, 572
The Capital Budgeting Evaluation Process, 574
Cash Flow Information, 575
Illustrative Data, 576
Cash Payback, 576
Cash Payback with Unequal Annual Cash Flows, 577
Net Present Value Method, 577
Equal Annual Cash Flows, 578
Unequal Annual Cash Flows, 579
Choosing a Discount Rate, 580
Simplifying Assumptions, 580
Comprehensive Example, 581
Additional Considerations, 582
Intangible Benefits, 582
Mutually Exclusive Projects, 584
Risk Analysis, 585
Post-Audit of Investment Projects, 585
Other Capital Budgeting Techniques, 586
Internal Rate of Return Method, 586
Comparing Discounted Cash Flow Methods, 588
Annual Rate of Return Method, 589
Appendix 13A—Time Value of Money, 592
Photo Credits, 616
Organization and People Index, 617
Subject Index, 621
Rapid Review, EP-1

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